Expat Women: Confession

No Money Left

Extract from book: Expat Women: Confessions

Q. In a few months' time, my partner and I will be returning to home base. We have enjoyed postings in Madrid, Berlin, Santiago and now Cairo. We have indulged in amazing holidays, eaten at spectacular restaurants and basically had a lifestyle that was second to none. The problem now is that this upcoming move home has made us realize we have no more than two months' salary saved in our joint bank account, which is virtually nothing. This is causing us both great anxiety, as we now see that we have been a little careless with our impressive salaries abroad and we are concerned we have not set ourselves up properly for the future. What can we do?

A. Congratulations for recognizing that you need to take more proactive steps to achieve the future you seek. There are six key financial scenarios that couples tend to fall into, that move them to the point of frustration or a breakdown in the relationship. In many cases, more than one scenario is present. Identify which of the following are true for your relationship:

• No personalized spending plan.

• No agreed-upon personalized spending plan.

• No clearly defined short-, medium- or long-term financial goals.

• No agreed-upon, clearly defined short-, medium- or long-term financial goals.

• No structure set up to carry out what has been agreed upon.

• A lack of commitment by one or both partners to do what it will take to reach the financial future that has been envisioned.

In terms of what you can do now, do not despair–there is plenty you can do to set yourselves up for a bright future. None of these steps are magic fixes, but if you commit to them, they will help to alleviate some of your anxiety and reassure you that you are getting back on track to achieving what you want for the future.

Step 1: Take responsibility and be accountable. You and your partner both need to accept responsibility for the joint spending of the past and realize that you will only change your joint habits if you work together. By encouraging and supporting each other in doing what is needed, not only will your stress levels be reduced, you will find it easier to reach your individual and joint goals.

Step 2: Identify spending triggers. Apart from buying the essentials, what has triggered you to spend money in the past? Is it a sense that your income is never-ending and therefore it has never needed to be monitored? Is it due to the influence of your peers? Is it due to habit–for example, have you a weekend routine that starts at the department stores, then moves to your favorite restaurant for lunch, followed by an afternoon or evening of entertainment with friends, at somewhere super expensive? Or have you spent money because it has made you feel better?

Step 3: Visualize the future. Take some time to think about what you most value and/or enjoy in life? What do you most want to have, whom do you most want to be, what will your close personal relationships look like, where will you be and what will you be doing one, five and ten years from now?

Step 4: Establish goals. Set goals that will help you to create your vision(s) of the future. Goals are the tangible benchmarks you identify that need to be accomplished to achieve your vision. Goals need to be distinguished from tasks–those actions we need to take to keep our lives running smoothly, like paying the bills, servicing the car, and all of the things that do not lead directly to fulfilling our life's vision. Goals must be attainable, be measurable and have time frames. For example, I will pay off my credit cards within six months, or starting today, I will set aside $100 per week until I build an emergency fund equal to three months' basic living expenses.

Brainstorm a list of goals that will get you closer to your vision(s). Then rank the goals you have listed, agree on priorities, and categorize the priorities by time. For example: immediate (within the next twelve months), short-term (one to five years), and long-term (more than five years away).

Step 5: Create a spending plan. Get into the habit of designing an annual spending plan to support your short and long term goals. A spending plan is different from a traditional budget, in that it is not just based on last year's expenditures but sets new figures, based on your new homework, experience and priorities. If, for instance, an exotic family vacation is a goal for the year and it is to be paid for in addition to your "usual" annual travel expenses, your total estimate for this category may be larger than last year and may require you to reduce spending in other categories.

When you fill in figures for the spending plan, you begin by listing all of your monthly or annual commitments and then move on to discretionary expenses. By planning out how you envision spending your money before you actually spend it, you should be able to reduce the frequency of or eliminate those spending triggers you may have identified in step two. The benefit for your relationship is that you will engage in genuine discussions about financial capability, and you will be making joint decisions about how to work together to achieve your vision(s) for the future.

Step 6: Review spending regularly. Track your spending as best you can and review it against the spending plan on a quarterly or semi-annual basis. This will allow you to make adjustments as you move through the calendar year. Review your goals annually to inform your next annual spending plan.

Step 7: Train your mind. A Neuro-Linguistic Programming (NLP) professional might argue that if you train your mind to believe you are struggling with your finances, then that is exactly what will happen. Instead, they might suggest that if you train your mind to believe you are in control of your finances and that you have the power to say no when you previously would have spent money, then that instead will be your outcome. We suggest you try training your mind to support you in your financial commitments, rather than to drag you down.

Step 8: Get professional help. One of your first tasks on arrival at home base should be to find yourselves a reputable financial planner. In addition, you may also find it useful to engage a life coach, either now in your current location or once you arrive home, who can help you clarify your vision of the future, motivate you and support you in taking action. A counselor may also be appropriate, depending on what your triggers for spending money have been in the past. In short, the more help and support you seek, the higher the likelihood you will move forward with your vision of a brighter financial future.

Here's wishing you a fast, sustainable financial recovery!

Special thanks to Jennifer A. Patterson, CFP® (US), CIMC™, CIMA®, TEP for helping with the original website version of this confession. Jennifer is the managing director of Patterson Partners Ltd. (www.patterson-partners.com), an international wealth management firm that specializes in cross-border financial planning. She is also the author of When Families Cross Borders: A Guide for Internationally Mobile People and she contributed to the finance chapter of Jeanne A. Heinzer's Living Your Best Life Abroad.